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The Information Commissioner's Office (ICO) has ordered the Department for Work and Pensions (DWP) to publish a report on the risks and benefits of identity cards (ID).

The department, which drew up the report on how the cards will fight identity fraud, had refused a request by the Liberal Democrats to release the report because it said it was not in the public interest.

In 2004, MP Mark Oaten called for the report to be published with commercially sensitive information removed. The DWP refused, claiming that releasing the information would make it harder to get value for money out of potential suppliers.

"Disclosure of work undertaken to date could potentially enable bidding suppliers to establish a reasonable estimate of the expected component costs applying to the work on which they are bidding, prejudicing the ability of the Home Office to achieve value for money," it said.

It also claimed that releasing the information prematurely could stop ministers and officials discussing the pros and cons of the policies.

The government lost its case when the decision went to the commissioner. Information commissioner Richard Thomas ruled that releasing the report is in the public interest.

Thomas said the information is covered by exemptions to the openness laws, but those are outweighed by the benefits of publishing the reports.

"There is clearly a strong public interest in the public knowing whether the introduction of identity cards will bring benefits to the DWP, and to other government departments, and if so what those benefits will be," he said.

The government has 30 days to decide to appeal against the verdict, otherwise it must release the information under freedom of information laws.

All government departments affected by the ID scheme have drawn up reports about its long term benefits. Three feasibility reports drawn up by the DWP officials examined the potential impact on identity fraud – one of ministers' key justifications for the cards.

They also looked at the possible risks the cards could pose to the department's work.

Liberal Democrats home affairs spokesperson Nick Clegg welcomed the verdict. "It is a measure of the government's failure to justify ID cards that during the passage of the bill they never once released a full estimate of its costs and impacts," he said.

"Hopefully this decision will lead to a belated revelation of those costs and impacts on the government' of this massive scheme."